Onion crisis: Shortages after best-ever harvest

Jul 09 2014, 10:24 IST
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India has produced a record harvest, but many farmers have lost a large share of their crop damaged in storage. India has produced a record harvest, but many farmers have lost a large share of their crop damaged in storage.
SummaryPM Narendra Modi is anxious to avoid the political fallout over the cost of the food.

Indian farmer Ranganath Watpade made a killing last year by putting off selling his onions until four months after he harvested them. This year, the same trick has backfired.

The country has produced a record harvest, but many farmers in the onion bowl of India's western state of Maharashtra have lost a large share of their crop damaged in storage, adding to the country's inflation woes.

A doubling in retail prices across major cities is especially troubling for staples such as onions, an ingredient that is present in just about every Indian meal.

Unseasonal weather, hoarding and price manipulation have in the past led to dramatic price rises, and the new administration of Prime Minister Narendra Modi is anxious to avoid the political fallout that has hit other governments over the cost of the food.

Supply shocks like these complicate the government's task of battling weak growth and inflation. It also underlines the irony of high food costs in India, which after China is the world's biggest fruit and vegetable producer.

Finance Minister Arun Jaitley's budget on Thursday will have to navigate through these issues as he must address inflation while steering away from populist measures such as food and fuel subsidies. Annual wholesale prices in May rose to a 5-month high of 6.01 percent.

Importing onions would be the only effective way to curb soaring prices, agriculture experts say, but similar steps in the past have failed to ease supplies.

"The only solution is imports, but that can't be done overnight," said R.P. Gupta, director at the National Horticultural Research and Development Foundation (NHRDF).

Prices are unlikely to calm before December. Planting of the new season crop has been delayed by scorching heat and subdued rainfall, blunting the affect of emergency measures by the government aimed at getting supplies to market and keeping a lid on prices.

"At the time of storage the bulbs looked good, but as I started pulling them out last week I realised that the ones at the bottom of the heap were rotten," said Watpade, 62.

On a recent visit, most farmers from this tiny village 200 km (125 miles) north of Mumbai were busy picking rotten onions from stocks piled up in fields or in makeshift sheds.

In spite of the experience in Watpade's village, India's onion production was estimated at a record 19.3 million tonnes in the year ending June 30, up nearly 15 percent from the previous year. But that has been

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